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Question 15  bond pricing

For a price of $95, Nicole will sell you a 10 year bond paying semi-annual coupons of 8% pa. The face value of the bond is $100. Other bonds with the same risk, maturity and coupon characteristics trade at a yield of 8% pa.

Would you like to the bond or politely ?


Question 115  capital structure, leverage, WACC

A firm has a debt-to-assets ratio of 50%. The firm then issues a large amount of debt to raise money for new projects of similar market risk to the company's existing projects. Assume a classical tax system. Which statement is correct?



Question 332  bond pricing, premium par and discount bonds

Bonds X and Y are issued by the same US company. Both bonds yield 6% pa, and they have the same face value ($100), maturity, seniority, and payment frequency.

The only difference is that bond X pays coupons of 8% pa and bond Y pays coupons of 12% pa. Which of the following statements is true?



Question 375  interest tax shield, CFFA

One formula for calculating a levered firm's free cash flow (FFCF, or CFFA) is to use net operating profit after tax (NOPAT).

###\begin{aligned} FFCF &= NOPAT + Depr - CapEx -\Delta NWC \\ &= (Rev - COGS - Depr - FC)(1-t_c) + Depr - CapEx -\Delta NWC \\ \end{aligned} \\###
Does this annual FFCF or the annual interest tax shield?


Question 578  inflation, real and nominal returns and cash flows

Which of the following statements about inflation is NOT correct?



Question 613  debt terminology

You own a debt asset. Are you a or a ?


Question 623  market efficiency

The efficient markets hypothesis (EMH) and no-arbitrage pricing theory are most closely related to which of the following concepts?



Question 732  real and nominal returns and cash flows, inflation, income and capital returns

An investor bought a bond for $100 (at t=0) and one year later it paid its annual coupon of $1 (at t=1). Just after the coupon was paid, the bond price was $100.50 (at t=1). Inflation over the past year (from t=0 to t=1) was 3% pa, given as an effective annual rate.

Which of the following statements is NOT correct? The bond investment produced a:



Question 805  short selling

Short selling is a way to make money from falling prices. In what order must the following steps be completed to short-sell an asset? Let Tom, Dick and Harry be traders in the share market.

  • Step P: Purchase the asset from Harry.
  • Step G: Give the asset to Tom.
  • Step W: Wait and hope that the asset price falls.
  • Step B: Borrow the asset from Tom.
  • Step S: Sell the asset to Dick.

Select the statement with the correct order of steps.



Question 970  foreign exchange rate, no explanation

Examine the below graph.

Which of the below statements is NOT correct?